The rapidly declining cost of renewable energy has ensured that renewables are cheaper than new coal plants and up to 2025 will raise the share of uncompetitive coal plants, a new report said Tuesday.
The share of uncompetitive coal plants will reach 60% in 2022 and 73% in 2025 when the rapidly declining costs of renewables push net annual savings to $105 billion, according to the report; How to Retire Early: Making Accelerated Coal Phase-Out Feasible and Just.
The report by Rocky Mountain, Carbon Tracker Initiative and Sierra Club shows that renewable energy is not only cheaper than new coal plants virtually everywhere but is already cheaper to build new renewable energy capacity, including battery storage than to continue operating 39% of the world’s existing coal capacity.
"A faster transition from coal to clean energy is within our grasp, and we show how to engineer that transition in ways that will save money for electricity customers around the world while aiding a just transition for workers and communities,” Paul Bodnar, managing director of the Rocky Mountain Institute, was quoted as saying.
The report said that replacing the entire fleet of global coal plants with clean energy plus battery storage could be done with net annual savings as early as 2022.
"The rapidly declining costs of renewables push net annual savings to $105 billion in 2025. All this is before considering coal’s dire health, climate, and environmental impacts, or accounting for the social and environmental benefits of reducing pollutants," the report read.
The report found that the coal phase-out has not kept pace with eroding economics. It recommended that to keep the Paris Agreement’s temperature targets within reach, global coal use should decline by 80% below 2010 levels by 2030. The report also highlighted the need for a rapid transition in OECD countries over the next decade and phase-out in the rest of the world by 2040.
- Highest shares in EU
According to the research, coal power is quickly facing economic obsolescence, independent of carbon pricing and air pollution policies.
In 2020, the report showed that US policymakers could help customers save up to $10 billion annually using the three-part approach to phase out 79% of the 236-gigawatt coal fleet that is currently uncompetitive.
Outside the US, the report found that a third of the current global coal fleet is already more costly to continue operating than building new renewables with storage.
According to the study, by 2025, that number will reach nearly 80% globally with several regions and countries seeing next to no competitive coal.
"In the European Union, 81% of the coal fleet is uncompetitive today and that percentage will reach 100% by 2025. In China, 43% of the coal fleet is uncompetitive today, and that number will reach nearly 100% by 2025. In India, 17% of the coal fleet is uncompetitive today, and that number will reach 85% in 2025," the report showed.
"Closing coal capacity and replacing it with lower-cost alternatives will not only save consumers and taxpayers money, but could also play a major role in the upcoming economic recovery," said Matt Gray, managing director, and co-head of power and utilities at the Carbon Tracker Initiative.
The report also laid out options for governments and public finance institutions to accelerate a coal phase-out.
It offered a three-pronged approach - firstly by refinancing to fund the coal transition and save customers money on day one, secondly by reinvesting in clean energy and thirdly through providing transition financing for workers and communities.
By Nuran Erkul Kaya